After a disappointing first quarter, the BEA's initial estimate for second-quarter GDP showed the economy expanded at a 4% annualized rate.

Economists were expecting Q2 GDP to grow 3%.

First-quarter GDP was also revised up to contracting 2.1% from a previous estimate of 2.9%.

The BEA said the upward revision to Q1 GDP primarily reflected upward revisions to private inventory investment, to nonresidential fixed investment, and to PCE.

The report also showed that in Q2, personal consumption expenditures increased 2.5%, compared with a revised 1.2% in Q1. Economists were expecting personal consumption expenditures to increase 1.9% in Q2.

The initial Q2 report also comes ahead of the Federal Reserve's latest policy announcement which is set for release today at 2:00 pm ET, and Bloomberg economists Joe Brusuelas and Josh Wright said that while the Q2 GDP print is encouraging, "inventory accumulation and uncertainty about household expenditures on health care suggest that policy makers won’t alter the current path of asset purchases or shorten the existing timetable for a potential policy rate increase."

Paul Ashworth at Capital Economics said of the report, "Finally, for once the public sector wasn't a drag on the economy, with a 3.1% rebound in State and local government spending more than offsetting a 0.8% decline Federal government spending."

Ashworth said this report supports his view that the Federal Reserve will begin raising interest rates next March.

Private inventories increased by $93.4 billion in the second quarter, and BI's Rob Wile summarizes some of the concerns that could surround a build in inventories, which the BEA said added 1.66% to Q2 GDP.

The report also contained a number of revisions to prior estimates, notably for 2011-13, as real GDP growth was revised to 2% from the previous estimate of 2.2% for that period. From the fourth quarter of 2010 to the first quarter of this year, real GDP increased at an annual rate of 1.8%.

"Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 4.0 percent in the second quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised)... The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased."

Page 2 of 2 - This table from the BEA gives a breakdown of the GDP components.